House committee approves extension of tax credits for employers

Rep. Stephen Hartgen listens to testimony in the House Revenue and Taxation Committee.

“We’re not throwing money at jobs. We’re throwing money at employers,” said Mark Warbis, director of communications for the governor’s office, in describing House Bill 88, the “Hire One More Employee” (HOME) Act. Warbis was testifying to members of the House Revenue and Taxation Committee on Friday.

The committee voted approval of the proposed legislation, so it will now be heard on the House floor.

HB 88 would provide a four-year extension to a tax credit to employers in Idaho that is currently slated to end on Dec. 31, 2013. It proposes to reward certain employers for hiring new workers, if they are hired at above minimum wage, and it proposes to extend a $1,000 tax credit for companies that hire a veteran.

Warbis, along with Derek Santos, economist for the Idaho Division of Financial Management, and Jeff Sayer, director of the Idaho Department of Commerce, presented both the bill and their projections of its economic impact over the next four years.

“I think it’s important for us to demonstrate to you that we are not just throwing money out the door,” Warbis told the committee members. After Warbis’ general presentation, one member of the committee focused on his concerns about the bill’s projected fiscal impact.

“According to your calculations, by 2018 the state is in the hole by about $45 million because of lost state revenues, is that correct?” asked Rep. Stephen Hartgen, R-Twin Falls.

“If that is the way you choose to see it, then you’re free to do so, sir,” Warbis replied. “I see it as the beginnings of new prosperity.”

“Do revenues to the state begin to increase after 2018?” Hartgen asked, to which Warbis replied, “we haven’t projected out beyond 2018.”

“So if we’re upside down by $45 million in 2018, how does this bill benefit the state of Idaho?” Hartgen asked Warbis.

“The bill sends the message that Idaho is open for business, especially to the rural communities,” Warbis responded. “I believe that all you’re looking at is the individual income taxes generated by the new workers, and not the other benefits of it.”

Sayer also had a response to Hartgen’s line of questioning. “You can look at it in the way you are, Rep. Hartgen, but I think you’re ignoring the multiplier effect,” Sayer said. “These new workers will be paying sales taxes and property taxes, and there is a ripple effect in the economy.”

One of the state’s fastest-growing businesses, Scentsy, also offered testimony in support of the tax credit measure. “We don’t hire because of tax credits, we hire because we need work done,” Tim Larsen told the committee. “Tax credits, however, are often a determination for where we hire, and this bill will help us in Idaho. We strongly support this.”

The bill contains a provision granting an additional $1,000 tax credit if a company hires a veteran. That drew a comment from the Idaho Freedom Foundation. “We appreciate the service that veterans have rendered to their country,” said Parrish Miller, policy analyst with the foundation. “However, attempting to create special tax deals so that employers will hire them sends an erroneous message about veterans and their employability.” He said most veterans “are extremely capable individuals who have no trouble competing on a level playing field.”

The lone dissenting vote on the committee came from Rep. Lenore Hardy Barrett, R-Challis. “I think what we’ve learned here is that if you rub the bottle long enough, a government genie will pop out and grant you your three wishes,” she said. “This country was founded on principles of free enterprise, and I am done with government attempts to manipulate the market with tax credits.”